LAWS OF MALAYSIA - agc.gov.my

1 Contracts1 LAWS OF MALAYSIAREPRINTAct 136 CONTRACTS ACT 1950 Incorporating all amendments up to 1 January 2006 PUBLISHED BYTHE COMMISSIONER OF LAW REVISION, MALAYSIAUNDER THE AUTHORITY OF THE REVISION OF LAWS ACT 1968IN COLLABORATION WITHPERCETAKAN NASIONAL MALAYSIA BHD2006 CONTRACTS ACT 1950 First enacted ..1950 ( OrdinanceNo. 14 of 1950) ..1974 (Act 136 July 1974)PREVIOUS REPRINTSF irst Reprint ..200023 LAWS OF MALAYSIAAct 136 CONTRACTS ACT 1950 ARRANGEMENT OF SECTIONSPART IIOF THE COMMUNICATION, ACCEPTANCE ANDREVOCATION OF , acceptance and revocation of , when of proposals and how must be by performing conditions, or receiving , express and impliedPART IIIOF CONTRACTS, VOIDABLE CONTRACTS ANDVOID agreements are are competent to contract4 Laws of MalaysiaACT is a sound mind for the purposes of contracting13. Consent 14. Free consent 15. Coercion 16. Undue influence 17. Fraud 18. Misrepresentation of agreements without free to set aside contract induced by undue void where both parties are under mistake as to matter of of mistake as to caused by mistake of one party as to matter of considerations and object are lawful, and what notVoid void if considerations and objects unlawful in without consideration, void, unless (a)it is in writing and registered;(b)or is a promise to compensate for something done;(c)or is a promise to pay a debt barred by limitation in restraint of marriage in restraint of trade voidException 1 Saving of agreement not to carry on business of whichgoodwill is sold;Exception 2 of agreement between partners prior to dissolution;Exception 3 or during continuance of in restraint of legal proceedings voidException 1 Saving of contract to refer to arbitration dispute that mayariseException 2 Saving of contract to refer questions that have void for uncertainty31.

2 (1) Agreements by way of wager void(2) Exception in favour of certain prizes for horse racingContracts5 PART IV OF CONTINGENT CONTRACTSS ection32. Contingent contract of contracts contingent on an event of contracts contingent on an event not event on which contract is contingent to be deemed impossible, ifit is the future conduct of a living person36.(1) When contracts become void which are contingent on happening ofspecified event within fixed time(2) When contracts may be enforced which are contigent on specifiedevent not happening within fixed contingent on impossible events voidPART VOF THE PERFORMANCE OF CONTRACTSC ontracts which must be of parties to of refusal to accept offer of of refusal of party to perform promise whollyBy whom Contracts must be by whom promise is to be of accepting performance from third of joint liabilities44.(1) Any one of joint promisors may be compelled to perform(2) Each promisor may compel contribution(3) Sharing of loss by default in of release of one joint of joint rightsTime and Place for for performance of promise where no application is to be made andno time is and place for performance of promise where time is specified andno application to be made6 Laws of MalaysiaACT for performance on certain day to be at proper time and for performance of promise where no application to be made andno place in manner of at time prescribed or sanctioned by promiseePerformance of Reciprocal not bound to perform unless reciprocal promisee ready andwilling to of performance of reciprocal of party preventing event on which contract is to take of defaults as to that promise which should be first performed, incontract consisting of reciprocal promises56.

3 (1) Effect of failure to perform at fixed time, in contract in which timeis essential(2) Effect of failure when time is not essential(3) Effect of acceptance of performance at time other than that agreedupon57.(1) Agreement to do impossible act(2) Contract to do act afterwards becoming impossible or unlawful(3) Compensation for loss through non-performance of act known to beimpossible or promise to do things legal, and also other things promise, one branch being illegalAppropriation of of payment where debt to be discharged is of payment where debt to be discharged is not of payment where neither party appropriatesContracts which need not be of novation, rescission and alteration of may dispense with or remit performance of of rescission of voidable of person who has received advantage under void agreement,or contract that becomes of communicating or revoking rescission of voidable of neglect of promisee to afford promisor reasonable facilities forperformancePART VIOF CERTAIN RELATIONS RESEMBLING THOSECREATED BY for necessaries supplied to person incapable of contracting, or onhis of person paying money due by another.

4 In payment ofwhich he is of person enjoying benefit of non-gratuitous or finder of of person to whom money is paid, or thing delivered, by mistakeor under coercionPART VIIOF THE CONSEQUENCES OF BREACH OF CONTRACT74.(1) Compensation for loss or damage caused by breach of contract(2) Compensation for failure to discharge obligation resembling thosecreated by for breach of contract where penalty stipulated rightfully rescinding contract entitled to compensationPART VIIIOF INDEMNITY AND GUARANTEE77. Contract of indemnity of indemnity holder when sued79. Contract of guarantee , surety , principal debtor , and creditor for s liability82. Continuing guarantee of continuing guaranteeSection8 Laws of MalaysiaACT of continuing guarantee by surety s of two persons, primarily liable, not affected by arrangementbetween them that one shall be surety on other s of surety by variance in terms of of surety by release or discharge of principal of surety when creditor compounds with, gives time to, oragrees not to sue principal not discharged when agreement made with third person to givetime to principal s forbearance to sue does not discharge of one co-surety does not discharge of surety by creditor s act or omission impairing surety seventual of surety on payment or s right to benefit of creditor s obtained by misrepresentation obtained by concealment on contract that creditor shall not act on it until co-surety promise to indemnify liable to contribute of co-sureties bound in different sumsPART IXOF BAILMENT101.

5 Bailment , bailor and bailee to bailee how s duty to disclose faults in goods to be taken by when not liable for loss, etc., of thing of bailment by bailee s act inconsistent with of bailee making unauthorized use of goods of mixture, with bailor s consent, of his goods with bailee of mixture, without bailor s consent, when the goods can of mixture, without bailor s consent, when the goods cannot by bailor of necessary of goods lent of goods bailed, on expiration of time or accomplishment s responsibility when goods are not duly of gratuitous bailment by entitled to increase or profit from goods s responsibility to by several joint not responsible on re-delivery to bailor without of third person claiming goods of finder of goods; may sue for specific reward finder of thing commonly on sale may sell s particular lien of bankers, factors, wharfingers, advocates and policybrokersBailments of Pledges125.

6 Pledge , pawnor and pawnee s right of not to retain for debt or promise other than that for which goodspledged. Presumption in case of subsequent s right as to extraordinary expenses s right where pawnor makes pawnor s right to by possessor of goods, or of documentary title to where pawnor has only a limited interestSuits by Bailees or Bailor againts by bailor or bailee against of relief or compensation obtained by such suitsSection10 Laws of MalaysiaACT 136 PART XAGENCYA ppoinment and Authority of AgentsSection135. Agent and principal may employ may be an not s authority may be expressed or of express and implied of agent s s authority in an agent cannot delegate144. Sub-agent 145.(1) Representation of principal by sub-agent properly appointed(2) Agent s responsibility for sub-agent(3) Sub-agent s s responsibility for sub-agent appointed without between principal and person duly appointed by agent to act inbusiness of s duty in naming such of person as to acts done for him without his authority.

7 Effect may be expressed or requisite to valid of ratifying unauthorized act forming part of a of unauthorized act cannot injure third personContracts11 Revocation of of of agency, where agent has an interest in principal may revoke agent s where authority has been partly for revocation by principal or renunciation by of revocation or and renunciation may be expressed or termination of agent s authority takes effect as to agent, and as tothird s duty on termination of agency by principal s death or of sub-agent s authorityAgent s duty to s duty in conducting principal s and diligence required from s s duty to communicate with of principal when agent deals, on his own account, in business ofagency without principal s s right to benefit gained by agent dealing on his own accountin business of s right of retainer out of sums received on principal s s duty to pay sums received for agent s remuneration becomes not entitled to remuneration for business s lien on principal s propertyPrincipal s duty to to be indemnified against consequences of lawful to be indemnified against consequences of acts done in good of employer of agent to do a criminal to agent for injury caused by principal s neglect12 Laws of MalaysiaACT 136 Effect of Agency on Contract with Third and consequences of agent s how far bound when agent exceeds not bound when excess of agent s authority is not of notice given to cannot personally enforce, nor be bound by.

8 Contracts on behalf ofprincipalPresumption of contract to of parties to a contract made by agent not of contract with agent supposed to be of person dealing with agent personally of inducing agent or principal to act on belief that principalor agent will be held exclusively of pretended falsely contracting as agent not entitled to of principal inducing belief that agent s unauthorized acts , on agreement, of misrepresentation or fraud by agentContracts13 LAWS OF MALAYSIAAct 136 CONTRACTS ACT 1950An Act relating to contracts.[Kuala Lumpur, Johore, Kedah, Kelantan,Negeri Sembilan, Pahang, Perak, Perlis,Selangor and Terengganu 23 May 1950;Malacca, Penang, Sabah and Sarawak 1 July 1974]PART IPRELIMINARYS hort title1.(1) This Act may be cited as the *Contracts Act 1950.(2) Nothing herein contained shall affect any written law or anyusage or custom of trade, or any incident of any contract, notinconsistent with this this Act the following words and expressions are used in thefollowing senses, unless a contrary intention appears from thecontext:(a)when one person signifies to another his willingness to door to abstain from doing anything, with a view to obtainingthe assent of that other to the act or abstinence, he is saidto make a proposal;(b)when the person to whom the proposal is made signifieshis assent thereto, the proposal is said to be accepted: aproposal, when accepted, becomes a promise;*NOTE See Appendix Contracts (Amendment) Act 1976 [Act A329] with respect to of MalaysiaACT 136(c)the person making the proposal is called the promisor and the person accepting the proposal is called the promisee.

9 (d)when, at the desire of the promisor, the promisee or anyother person has done or abstained from doing, or does orabstains from doing, or promises to do or to abstain fromdoing, something, such act or abstinence or promise iscalled a consideration for the promise;(e)every promise and every set of promises, forming theconsideration for each other, is an agreement;(f)promises which form the consideration or part of theconsideration for each other are called reciprocal promises;(g)an agreement not enforceable by law is said to be void;(h)an agreement enforceable by law is a contract;(i)an agreement which is enforceable by law at the option ofone or more of the parties thereto, but not at the option ofthe other or others, is a voidable contract; and(j)a contract which ceases to be enforceable by law becomesvoid when it ceases to be IIOF THE COMMUNICATION, ACCEPTANCE ANDREVOCATION OF PROPOSALSC ommunication, acceptance and revocation of communication of proposals, the acceptance of proposals,and the revocation of proposals and acceptances, respectively, aredeemed to be made by any act or omission of the party proposing,accepting, or revoking, by which he intends to communicate theproposal, acceptance, or revocation, or which has the effect ofcommunicating , when complete4.

10 (1) The communication of a proposal is complete when it comesto the knowledge of the person to whom it is (2) The communication of an acceptance is complete (a)as against the proposer, when it is put in a course oftransmission to him, so as to be out of the power of theacceptor; and(b)as against the acceptor, when it comes to the knowledge ofthe proposer.(3) The communication of a revocation is complete (a)as against the person who makes it, when it is put into acourse of transmission to the person to whom it is made, soas to be out of the power of the person who makes it; and(b)as against the person to whom it is made, when it comes tohis (a) A proposes, by letter, to sell a house to B at a certain communication of the proposal is complete when B receives theletter.(b) B accepts A s proposal by a letter sent by communication of the acceptance is complete as against A, when the letter is posted;as against B, when the letter is received by A.